File No. 5315/902.
It is admitted that the Hankow-Canton fine does undoubtedly form an
integral part of the whole loan agreement, with the reservation,
however, that on May 19 last an arrangement was concluded between the
British, French, and German groups by which the chief engineer on this
section should be British. The foreign office seems inclined to the view
that the United States, by agreeing to waive their rights as to a chief
engineer on the Canton line, has acknowledged thereby the privileged
position of the British. In the language of the note:
As regards the Szechuen portion of the railway the British Government are
aware that the Germans have only given the American group 200 kilometers
subengineering rights, but are of the opinion that 200 kilometers, since
they are part of a line already conceded by China, are of more value
than a concession of an extension which is merely problematical. As
tending to show that in their opinion the proposed division is a fair
one, the British group are still willing to exchange sections with the
American group.
In conclusion, Sir Edward Grey earnestly trusts that the United States
will accept his point of view and in so doing greatly facilitate an
agreement between the four groups which is daily becoming more
urgent.
I have to-day cabled you the substance of the inclosed note.
[Inclosure.]
The Minister of Foreign
Affairs to Ambassador Reid.
Foreign Office,
London, April 11,
1910.
No. 11480/10.
Your Excellency: 1 have received your
excellency’s note of the 2d instant, stating that the United States
Government assent to the principle of equal division in the matter
of engineers on the Hukuang Railway, but that they do not consider
the arrangement proposed by His Majesty’s Government to be an
equitable manner of settling the question.
Your excellency adds that the effect of the British proposal would
appear to leave the American group only 400 kilometers, as against
the 1,500 kilometers given to the British group, and that your
Government fail to see why the Hankow-Oanton section should be an
integral part of the Hukuang agreement for the loan and materials,
but not for engineering rights.
I would, however, point out that the United States Government
themselves admit that having arrived late in the field they agreed
to waive their rights as to chief engineers, though reserving them
on further extensions, and this undertaking would therefore appear
to exclude, as far as the American group is concerned, the
Hankow-Canton section from the discussion.
This section does undoubtedly form an integral part of the whole loan
agreement, with the important reservation, however, of the chief
engineer, who, by an arrangement come to between the French and
British groups in February, 1908, and confirmed by the British,
French, and German groups on May 19 last, was to be British.
It therefore follows that neither the American nor the French group
can reasonably claim engineering rights on the Canton section of the
Hukuang Railway.
As regards the Szechuen portion of the railway, His Majesty’s
Government have always maintained that though they had agreed to
make the necessary sacrifices in order to admit last summer the
American group into the arrangement, these sacrifices should at any
rate not be greater than those made by the other two groups, and it
is for this reason that they have proposed a division of the line
into four equal parts of 600 kilometers per group.
I am aware that the Germans have only given the American group the
right to appoint a subengineer on 200 kilometers of their 800,
which, with the 400 allotted to the American group on the extension
to Ch’eng-tu if and when conceded by China, will make up their 600
kilometers; but it must be borne in mind that these 200 kilometers
are part of a line already conceded by China, whereas the concession
of the extension is, to say the least of it, problematical.
Moreover, that the division is a fair one, at any rate, in the
opinion of the British group, is, I think, amply proved by the
recent offer made by that group to exchange sections with the
American group, an offer which your excellency will recollect was
not accepted.
It will therefore be seen that the privileged position of the British
group on the Canton line has been acquiesced in by the French and
later on by the French and German groups, and last of all by the
American group itself, inasmuch as it waived its rights to a chief
engineer except on any extension of the present line, and that the
American group have a position on the Szechuen line at any rate
equal to that held by the British group, which, it must not be
forgotten, has never withdrawn its offer to exchange sections with
the American group should they so desire.
[Page 278]
It is perfectly true, as stated in your excellency’s note, that the
arrangement proposed does not constitute an equal division of the
whole of the lines now under discussion, but His Majesty’s
Government have always claimed and still claim, on behalf of the
British, that they are entitled to a privileged position as regards
the Hankow-Canton section in virtue of their having alone advanced
the funds required to enable China to repurchase the concession of
this line from the original holders. Moreover, the preference thus
claimed is now confined to a mere question of engineering rights,
absolute equality as regards finance and material having already
been conceded.
In these circumstances I earnestly trust that the United States
Government will see their way to accepting the point of view of His
Majesty’s Government in the matter, and I have no reason to doubt
that their acquiesence would greatly facilitate an agreement between
the four groups, which, in view of recent events in the Yangtze
Valley, is daily becoming more urgent.
I have, etc.,
(For the Secretary of State):
F. A. Campbell.
